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Dave & Buster’s Slips 8% on Disappointing Results
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Dave & Buster’s Slips 8% on Disappointing Results

Dave & Buster’s Entertainment, Inc. (NASDAQ: PLAY) has disappointed investors with weaker-than-expected results for the fourth quarter of Fiscal 2021 (ended January 30, 2022). The quarterly earnings lagged the consensus estimate by 13.3%, and the sales missed the same by 6%.

Shares of Dave & Buster’s decreased 8.3% to close at $39.55 in the extended trading session on Monday.

Dave & Buster’s provides entertainment and dining services at its 144 venues located in North America. It also operates in Canada and Puerto Rico. The company’s headquarters is in Coppell, TX.

Quarterly Highlights

In the reported quarter, the company’s earnings were $0.52 per share, below the consensus estimate of $0.60 per share. However, the bottom line improved from the year-ago loss of $1.19 per share.

Revenues stood at $343.1 million, reflecting year-over-year growth of 193.7%. However, the top line lagged the consensus estimate of $365.1 million.

Food and beverage revenues (accounting for 35% of the quarter’s total revenues) increased 198.6% year-over-year to $120.1 million. Likewise, Amusement and other revenues surged 191.1% from the year-ago quarter to $223 million.

Compared with the fourth quarter of Fiscal 2019, the company’s comparable store sales were down 6.8%, and Special Event comparable store sales decreased 58%. However, walk-in comparable store sales were up 2.1%.

Total operating costs were $296.6 million, up 73.6% year-over-year. It represented 86.4% of the quarter’s total revenues. Notably, this cost-head includes the total cost of products of $54.9 million. Operating income was $46.6 million in the quarter, with an operating margin of 13.6%.

The cash flow generated from operating activities in the quarter was $84.6 million.

Annual Highlights

The company’s earnings in the year were $2.21 per share, above the year-ago loss of $4.75 per share. Revenues at $1,304.1 million reflected an increase of 198.7% from the previous year.

At the end of Fiscal 2021, the company owned 144 stores, up 2.9% year-over-year, while its store operating weeks were 7,161, up 82.6% year-over-year. Revenues per store operating week were $182 in the year (up 64% year-over-year).

Exiting the fourth quarter, Dave & Buster’s cash and cash equivalents were at $25.9 million, representing year-over-year growth of 117.9%. Long-term debts, net, stood at $431.4 million, down 27.7% year-over-year. Senior secured notes worth $55 million were redeemed at a premium valuation in the fourth quarter.

Official Comment

The Board Chair and Interim CEO of Dave & Buster’s, Kevin Sheehan, said, “This Company has significant upside potential and with our continued focus on innovation, growth and value creation, we are driving toward unlocking that value. We are optimistic about the future and look forward to sharing our ongoing progress with everyone.”

Business Update

Dave & Buster’s reported that its business has solidified in the first eight weeks of the first quarter of Fiscal 2022 (ending April 2022). Comparable store sales were up 5.4%, and Walk-in comparable store sales expanded 9.1% from the same period in 2019. The only exception was a 42% fall in Special Event comparable store sales.

Stock Rating

On March 28, Chris O`Cull, an analyst at Stifel Nicolaus, reiterated a Hold rating on Dave & Buster’s.

Dave & Buster’s presently has a Strong Buy consensus rating based on five Buys. Dave & Buster’s average price target is $57.25, suggesting 32.77% upside potential from current levels. Over the past year, shares of Dave & Buster’s have declined 7.9%.

Bloggers Sentiments

Per TipRanks data, the financial blogger opinions are 90% Bullish on PLAY, compared with the sector average of 67%.

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